Who’s in Charge at Cetera?

Rumors are rife that CEO Larry Roth may be replaced by Chairman Robert Moore

Is CEO Larry Roth still leading Cetera Financial Group’s parent firm and its 9,000 independent reps? Or is Chairman Robert Moore, a former executive with rival LPL Financial (LPLA), running the ship? Stay tuned, sources say.

“I have been told recently by [an insider] that details on Cetera’s future plans won’t be known for a week or so,” said recruiter Jon Henschen, in an interview. “They are trying to figure out who they want to be and what they want to do.”

According to a Cetera spokesperson, “As a matter of policy, we do not publicly discuss speculation or rumors related to our organization.”

Thus, a leadership shift at the independent broker-dealer group “seems to be [going on], since it is not being denied. That’s a pretty good indicator,” Henschen said. “If a company doesn’t deny news reports, it speaks volumes.”

Investors are not happy with low oil prices, and a growing number of them are taking action against their advisors.

The news of a possible change at the top was first reported by RIABiz on Friday.

“Perhaps the private equity firms that now own Cetera are clashing with [Roth], who is known to have a strong personality and wants things to be done his way. There could have been a falling out,” Henschen said.

“It could be that the new owners found favor with [Moore] and that someone is on out. That someone could be Larry,” Henschen said. The new investors “maybe see him as part of the problem and want new blood” at the top.

The recruiter expects the company to announced its practice management, technology, recruiting and other plans for 2017 in the fourth quarter. “They have to put this in place in the fourth quarter or shortly thereafter for a ’17 rollout. And they could make a big push with lots of ads and aggressive recruiting,” he added.

Cetera has gone through a long list of transitions since Nicholas Schorsch, one of the founders of Cetera’s earlier parent company, RCS Capital (now Aretec), and some of his partners became embroiled in an accounting scandal tied to a nontraded real estate investment trust group and related matters roughly two years ago.

Earlier this year, RCS Capital and Cetera reached a settlement with Lightyear Capital over its recruiting of executives associated with Cetera, which RCAP said had threatened its bankruptcy proceedings and Cetera’s restructuring plans.

Two former Cetera executives now with Lightyear and its affiliates — Cynthia Hamel and Susan Theder — have agreed not perform work or services in ways that affect the Advisor Group’s competitive position vis-à-vis RCS Capital and Cetera through at least Sept. 4 and no later than Dec. 4.

Furthermore, Lightyear and its affiliates have agreed to not hire, employ or retain senior management of RCS-related companies through Sept. 26.

“It’s pretty key” that these arrangements end in September, said Henschen. “There could be more brain drain from Cetera.”

Twists & Turns

Lightyear and its affiliates sold Cetera to RCS Capital in 2014 for more than $1 billion and are in the process of buying the Advisor Group from AIG.

Roth used to be head of the AIG Advisor Group and is a trained attorney. When he moved to RCAP in mid-2014, then-Cetera CEO Valerie Brown was pushed out.

Brown has been tapped to lead the Lightyear-owned Advisor Group, which has about 5,200 affiliated reps, as its new executive chairwoman once Lightyear’s purchase of the group is wrapped up, most likely in the second quarter.

Lightyear was one of some 25 companies that RCS Capital met with last year when it was trying to raise capital. In fact, Lightyear was one of 10 potential investors who signed a confidentiality agreement as part of this process.

Asked if the current rumors about a possible change in leadership at Cetera seem to be another twist in an already convoluted situation, the recruiter answered: “Yes, indeed.”